Case Analysis – Chipotle Mexican Grill

Case Analysis – Chipotle Mexican Grill

Factors That Contributed to the Loss of Confidence in the Chipotle Brand

Food contamination events and foodborne disease outbreaks contributed to the loss of Chipotle’s brand. A series of food poisoning incidents that occurred caused unexpected food safety scares among customers. Consumes usually expect their products to be safe from contamination. Studies on the willingness to pay more for higher safety levels indicate that consumers are readily willing to bear the cost of food products with higher levels of safety because of the risk from physical, microbial, and chemical contamination (Kinsey, 2021). The safety outbreaks in Chipotle’s various grills put their food handling measures at the center of the market safety scare. Chipotle purchased its food supply from independently owned and operated regional distribution centers rather than approved suppliers. Customers considered the practice unethical as it breached supply chain protocols. In the same vein, poor menu strategy, which served food with several gradients mixed. This situation made it difficult for FDA’s investigation to identify a single ingredient to explain the outbreak. Therefore, the food safety lapse, unethical supply chain practices, and poor menu strategy contributed to the loss of confidence in Chipotle’s brand.

Consumer Trust-Improvement Strategies

Actions taken to date by Chipotle present a strategy that would improve consumer trust. The steps taken reflect the restaurant’s awareness of the value of planning and responding well to food trust issues. Essentially, the strategies embody a positive culture of quality and safety from the farm to the restaurant. Chipotle’s quality assurance department designed and implemented food safety programs for its restaurants and suppliers to comply with food safety regulations, not to mention changes in food handling and preparation (Thomson, 2019). These strategies are lead indicators to identify and manage potential food safety risks, extending to media reports, customer complaints, and customer trends. Furthermore, Chipotle’s commitment to using organically grown local produce to change customers’ perception of fast food will improve customers’ attitudes toward its organic food supply chain. According to Ji et al. (2019), introducing organic food influences customers’ perception of health benefits and willingness to pay for premium prices for the food they consider exceptionally healthy. The commitment to continue with the food-with-integrity initiative shows a risk-resilient business culture and best practices essential for winning back customers’ trust. In the same breadth, internal training programs to update all employees on the newly implemented safety standards for food safety and food handling practices demonstrate a focus on performance improvement and strategic alignment (Ji et al., 2019). In particular, Chipotle has ensured that its resources and efforts are focused on fighting the biggest business threat and areas where food trust issues could arise. By having more control over the safety and quality of its supply chain, the restaurant shows that it is dedicated to improving food safety and other customers’ concerns. The strategic alignment and performance improvement focus can eventually win customers’ trust back.

How Chipotle’s Internal Environment Compares to the Internal Environment of One of Its Competitors and Sustainable Competitive Advantage

Chipotle’s internal environment comprises organizational resources and competencies that provide customers with a certain level of value. One of these competencies is the customer relationship through an online game called Guac Hunter and free kid meals for families that pursue an entrée on Sundays. The idea is to build sustainable customer relations for financial benefit. This competency enables Chipotle to differentiate itself from its market competitors. Another competence that sets Chipotle apart from its competitors is the sale of organic foods that customers consider safe and healthy. Organic food meets customers’ needs in terms of healthy and trustworthy fast food. Chipotle also has well-trained staff on safety and food handling practices that make it stand out on the market. As a result, customers are treated in the most hospitable way. The hotel also has customized services that make it more favorable than its competitors. In particular, it allows customers to select ingredients of their choice by speaking directly to employees. Additionally, Chipotle’s advertising campaigns demonstrate a long-standing commitment to dealing with the best ingredients. The marketing campaign builds the hotel’s brand. The reputable image in the market gives it an upper hand against its competitors.

Based on the internal environment analysis, new strategic moves implemented by Chipotle will go a long way in achieving a competitive advantage. Some strategic moves include DNA-based testing of many ingredients to establish their quality and safety before delivery, changes in food handling and preparation practices, and improved protocol for marinating meat. These new business practices demonstrated Chipotle’s attention to the potential supply chain risks. An overwhelming number of studies show that proactive behavior in risk management practices leads to consumer confidence, improved food service integrity, and customer loyalty (Cheraghalizadeh et al., 2021). The dynamic capabilities are the bloodline of the restaurant’s capability to attain competitive advantage. The competencies will improve Chipotle’s organizational performance by responding to customers’ needs in real time.

Additional Recommendations For Chipotle to Gain Consumer Trust and Reclaim a Leadership Role in the Fast-Food Industry

Chipotle should consider implementing social marketing to communicate and deliver value to its customers and potential customers. This approach will change customers’ perception of the restaurant food safety fear. Another step involves investing in high-technological solutions to stay ahead of its competitors. The innovative solutions could help the restaurant perform data analytics to determine trends and customer behaviors and predict its future performance.

Business Strategy to help Chipotle Achieve a Competitive Advantage

An important business strategy for Chipotle is to involve the food quality and safety team in its marketing campaigns. Integration between marketing managers and food safety managers would help incorporate safety and food quality messages in the marketing campaigns. The strategy would reassure customers of the optimum food safety standards at Chipotle.

References

Cheraghalizadeh, R., Olya, H., & Tumer, M. (2021). The effects of external and internal factors on competitive advantage—Moderation of market dynamism and mediation of customer relationship building. Sustainability, 13(7), 4066. https://doi.org/10.3390/su13074066

Ji, C., Chen, Q., & Zhuo, N. (2019). Enhancing consumer trust in short food supply chains. Journal of Agribusiness in Developing and Emerging Economies, 10(1), 103-116. https://doi.org/10.1108/jadee-12-2018-0180

Kinsey, J. (2021). Choices article – food safety in three dimensions: Safety, diet quality, and bio-security. Choicesmagazine.org. Retrieved from https://www.choicesmagazine.org/2005-4/supplychain/2005-4-11.htm.

Thomson., A., Arthur. (2019). Chipotle Mexican Grill’s strategy in 2018: Will the new CEO Be Able to Rebuild Customer Trust and Revive Sales Growth? The University of Alabama

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Read “Case 12: Chipotle Mexican Grill’s Strategy in 2018: Will the New CEO Be Able to Rebuild Customer Trust and Revive Sales Growth?” in your Connect textbook.

Write a 350- to 700-word response that addresses the following questions:

What factors contributed to the loss of confidence in the Chipotle brand?
Do the actions taken to date present a strategy that would improve consumer trust? Why or why not?
Consider Chipotle’s competitors. How does Chipotle’s internal environment compare to the internal environment of one of its competitors? Based on this analysis, what is the probability that the strategic moves implemented by Chipotle would lead to a sustainable competitive advantage? Explain.
What additional recommendations would you make for Chipotle to gain consumer trust and reclaim a leadership role in the fast-food industry? Provide justification for your response.
Based on the information presented in this case study, what kind of business strategy would you suggest to help Chipotle achieve a competitive advantage?